Why did the Zip share price fly 10% higher today?

Zip shares' huge gain today might have something to do with another BNPL stock.

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It's been another pleasing day for the All Ordinaries Index (ASX: XAO) and most All Ords shares this Friday in a very happy end to the trading week. At present, the All Ords is up a rosy 1.14%. But let's talk about the Zip Co Ltd (ASX: ZIP) share price.

Zip shares were well and truly smashing the broader market today. In afternoon trading, this buy now, pay later (BNPL) share was trading a whopping 10.6% higher, taking Zip stock up to 36 cents a share. Zip shares have since retraced to 34 cents apiece just ahead of the close of trade.

So what's going on here? Surely such a massive one-day lift has some kind of underlying catalyst.

Well, it's not entirely clear why Zip shares surged so enthusiastically. But there are a few factors that are probably at play here.

Why is the Zip Share price surging 10% today?

There hasn't been much in the way of news out from this All Ords share since the quarterly earnings report we got a look at back on 24 October. As we reported at the time, these earnings saw Zip shares surge by more than 6% that day.

That was thanks to some encouraging numbers, like the 31.9% surge in quarterly revenue to $204.4 million and the 11% rise in transaction volumes to $2.3 billion.

But subsequently, investors' enthusiasm lost steam. As of Wednesday's close, the company was back to where it was prior to the release of those earnings.

However, yesterday saw the Zip share price gain 10%, which has, of course, been followed by today's rise.

One possible explanation for its strong showing relates to what is going on with the Block Inc (ASX: SQ2) share price today. Block is the US payments company that famously bought Zip-rival Afterpay early last year in what was the largest Australian takeover ever. So this is an ASX share that has a huge stake in the BNPL space.

Today, Block shares have rocketed an eye-watering 25%, following the company's latest quarterly update that was released this morning.

As my Fool colleague James went today, this report saw Block reveal a 24% surge in revenues to US$5.62 billion, alongside a 21% jump in gross profits to US$1.9 billion.

With those kinds of numbers, it's not a huge surprise to see Block's share price soar so dramatically. So it's likely that this is also flowing into Zip shares today as well.

So a happy day for ASX BNPL shares and their investors all around.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block and Zip Co. The Motley Fool Australia has positions in and has recommended Block. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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